Taxpayer and his spouse want to give $40,000 to their parents. Should they each jump through the hoops of each of them giving $10K (more or less) to each parent in order to avoid having to file a gift tax return?
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"The only function of economic forecasting is to make astrology look respectful" - John Kenneth Galbraith -
The 2014 threshold is $14,000. Thus, each spouse could separately give $14,000 in 2014 ($28,000), and one could give the remaining $12,000 in January of 2015 for a combined gift of $40,000 without having to file any gift tax returns or jump through any hoops, unless you consider the delayed $12,000 gift to be a form of jumping through hoops. -
Thanks Bees. They want to do the whole $40,000 immediately. I knew about the $14K limit but was just speaking in generalities. They will probably be making other smaller gifts during the course of the year and I was just trying to give them a structured way to keep track. The gifts will be coming from a joint checking account, so I'm thinking each spouse must write the check individually, sign it, and note in the "memo" section who it is intended for."The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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As I read your post, there are two T/Ps ... H&W ... and two parents, either one parent of each spouse or both parents of one spouse. Whichever combination it is, the donors can give the entire $40k at the same time. Just elect "gift splitting," whereby each $20k gift is treated as having been gifted by each spouse. There is a section on F-709 to make this election. When this is done, each spouse has to file his/her own F-709, and each spouse must sign the other spouse’s return. Both gift tax returns should be mailed to the IRS together ... i.e. in the same envelope.
Since there are two donors and two donees, the entire amount is excludable and does not reduce the donors' lifetime unified exemption. It's treated like four gifts of $10k each.Roland Slugg
"I do what I can."Comment
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If I understand the OP
There is the Taxpayer and the Spouse - they can each gift $ 14,000 to one person
Taxpayer gifts Dad/Dad-inlaw $ 14,000 and gifts Mom/Mon-inlaw $ 14,000 so that is $28,000
Spouse of Taxpayer gifts Dad/Dad-inlaw $ 14,000 and gifts Mom/Mom-inlaw $ 14,000 this is $ 28,000
So Taxpayer and Spouse could gift as much as $ $56,000 in one year and there would be no gift tax return as it would not exceed the annual exclusion.
SandyWhat if my spouse and I want to give away property that we own together?
You are each entitled to the annual exclusion amount on the gift. Together, you can give $22,000 to each donee (2002-2005) or $24,000 (2006-2008), $26,000 (2009-2012) and $28,000 on or after January 1, 2013.Comment
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I think the simple answer is YES. If they do gift splitting they will have to file a gift tax return.Originally posted by JohnH View PostComment
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The intent was to avoid having to file a gift tax return.
That's the reason behind the question regarding separate contributions to each parent by each spouse. Incidentally, the recipients are both parents of one of the spouse/givers."The only function of economic forecasting is to make astrology look respectful" - John Kenneth GalbraithComment
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I believe Sandy has it nailed--- With this scenario, no gift tax returns required. I would stress separate checks.Originally posted by S T View PostComment
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to sum it all up.
taxpayer writes a check to Dad for 10,000.
taxpayer writes a check to mom for 10,00.
spouse writes a check to dad for 10,000
spouse writes a check to mom for 10,000.
each gift is under the annual exclusion amount.
nothing to report.AJ, EAComment
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Just don't forget to factor in other gifts during the year, both birthday/holiday type gifts as well as help with living expenses from time to time, EVERYTHING given during that year. And write separate checks to have a good paper trail.Comment
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